Off-site ATMs ‘boosting financial inclusion’

The ATM remains a key part of any bank’s strategy, but increasingly, it is not only as a self-service part of the branch where these devices are having their greatest impact on financial institutions’ strategies.

Recently-released figures from Retail Banking Research (RBR) show that more than half of all ATM installations now take place off-site, with this demand being driven by efforts to serve customers more cost-effectively and attract new users.

In developed markets, the rise of off-site ATMs is part of banks’ efforts to reduce costs while still providing a high level of service. RBR noted that in the Netherlands, for example, the number of off-site ATMs grew by 800 between 2011 and 2015 against a backdrop of banks looking to reduce their branch footprint.

But it is in emerging markets where these devices may have the most potential. Banks in these countries are increasingly viewing ATMs as a more cost-effective alternative to opening full branches.

Off-site ATMs are particularly advantageous in nations with large rural populations, where banks may not consider it cost-effective to open a branch in every small town and village. Instead, the deployment of ATMs is a much cheaper option that can bring financial services to customers who would have previously been unbanked.

One example of this is in Chile, where the state bank has a mandate to reach out to unbanked and underbanked population segments. As a result, it has become the country’s largest deployer of ATM devices.

As well as boosting financial inclusion, increasing the number of off-site ATMs can also be a great revenue generator for banks. RBR noted that by choosing locations carefully to ensure they can take advantage of high footfall, banks can enjoy high transaction volumes and any resultant surcharges and interchange fee income.

However, this may mean that banks are increasingly competing with independent ATM deployers (IADs) for market share in the most lucrative locations.

RBR research leader Rowan Berridge commented: “As IADs expand their fleets, more and more retail centres, transport hubs and other non-branch locations will host ATMs. Coupled with increasing off-site deployment by banks, in future it will be even easier for customers to find a convenient ATM away from branches.”

Written by Jack Dougal